Pragmatic Marketing’s box of the month for July is Demo’s. How can that possibly relate to pricing? After thinking hard, I came up with one direct relationship and several ways they are similar.
First the direct relationship. Obviously, the better the demo, the more your customer is willing to pay, the more you can charge. This just makes sense and happens to be true with everything that is in the value creation category. The more value you create in your buyer’s mind, the more you can charge. Lesson: learn to give great demos to maximize the price you can achieve.
Now, for the similarities –
Timing – You must be careful with your timing on both when you give a demo and when you deliver pricing. Bad timing on either and you can lose the deal altogether. You want to give your demo AFTER you have created rapport with the buyers. Something typically goes awry during a demo, or we show them the ugly admin screen. Having rapport will help you overcome these mishaps. You want to deliver pricing AFTER you have built up value in the buyer’s mind. If you give it too soon, you could lose the deal because the buyer thinks the price is too high without full information. It’s tough to overcome that once they’ve written you off.
Best done face to face – Demos over the web are hard. You lose the ability to read your audience. You can’t see what excites them and what bores them. You get so much more information and may increase your rapport with the buyers during a face to face demo. The same is true for pricing. Delivering the price is the initial round in the upcoming negotiations. Seeing the buyers face when you deliver it can give you valuable information about whether your price is too high or not. Unless you are making a Take it or leave it (TIOLI) offer, you should be face to face when delivering price.
Negotiable – Both are negotiable. Obviously prices are negotiated all the time. How often, during a demo, does the buyer say “Can you make it do this?” And then that becomes part of the contract. The specials … ugh. What’s funny is in both demos and pricing, we’d prefer they be non negotiable.
Scripted – Demos should be scripted. The person demoing should know ahead of time exactly what they are going to do. It may be slightly customized to match the problems of the buyer, but it shouldn’t be a random walk through the software. Similarly, delivering prices should be scripted. You must be sure to explain where the price came from and how it is far lower than the value the buyer will receive. If you just drop off the price, it is more likely to appear too high and you lose without even knowing why.
Neither can win the deal, either can lose it – I believe it is more likely you will lose the deal due to a poorly delivered demo rather than the price. On the other hand, neither pricing nor demos are powerful enough by themselves to win the deal. It takes many things done well to win a large deal.
Hopefully you found this constructive, comparing pricing and demos. I sure did as I was writing it. If you think of any other similarities or even contrasts, please feel free to share them with me and or the reader community.